The futures and spot markets are rising in tandem, with the premium structure providing support for the price. Positive signals have been released from the US-China trade negotiations, but global markets still need to remain cautious. Starting from Wednesday, a crucial 72-hour window will be entered. Today, the atmosphere in the domestic commodity futures market has improved somewhat. The main contract of copper futures (2509) in Shanghai opened with strength, and the market continued to move in a relatively strong trend. As of 10:45, the latest price was 79,150 yuan/ton, up 0.22%. In the spot market, trading in the morning continued to be cautious, although it is currently in the traditional off-season and supply and demand are weak, the market circulation of goods has tightened, and the premium structure continues to support the willingness of dealers to hold the price; however, the downstream sector, except for the urgent needs, mostly holds a wait-and-see attitude, and the overall transactional enthusiasm is average. Data from the Yangtze River Nonferrous Metals Network shows that the spot price of 1# copper in the Yangtze River is 79,390 - 79,430 yuan/ton, with an average price of 79,410 yuan/ton, up 290 yuan/ton compared to yesterday, and the spot premium has increased by 20 yuan, reaching 250 yuan/ton.
1. Macro Storm Center: Fed Policy and China-US Negotiations Become Core Variables The global market is standing at the crossroads of the "critical 72-hour window", and the core contradiction of copper price movement has shifted from industrial supply and demand to macro expectation games. Fed interest rate decision: The "last-ditch effort" for rate cuts. The market generally expects that the Fed will maintain the interest rate range of 4.25%-4.5% at the meeting on Wednesday (July 30th), but the focus is on the internal disagreement of the decision-making layer - one side (represented by Powell) advocates "delaying rate cuts to assess the impact of tariffs on inflation", the other side (such as some dovish committee members) calls for "acting quickly to avoid an economic hard landing". If the Fed releases the signal of "no rate cut this year", the US dollar index may break through the 100 mark, directly suppressing the copper price denominated in US dollars; if it unexpectedly releases a dovish signal, the copper price may experience a short-term rebound. China-US trade negotiations: The "limited positive" of extending the truce period After the Stockholm talks between China and the US, both sides agreed to extend the 90-day tariff truce agreement reached in May 2020, but the specific effective time and duration were not clear. Although this progress avoided the immediate deterioration of the situation, the analysis generally believes that the negotiations will still be "complex and lengthy". Notably, the US recently reached trade agreements with the EU (600 billion US dollars) and Japan (550 billion US dollars), the external risks have decreased, which may weaken the "excuse" for the Fed to refuse to implement loose policies, indirectly providing support for the copper price. US economic data: The "ice and fire signals" of GDP and employment The Atlanta Federal Reserve predicts that the US second-quarter GDP growth rate will be 2.9% (mainly due to the decline in imports), but the number of new jobs in July may slow down to 115,000 (previous value 147,000). If the economic data is "below expectations", it may strengthen the rate-cut expectation; if "above expectations", the negative correlation between the US dollar and the copper price will be further highlighted.
2. Supply and Demand Fundamentals: Tight Supply and Low Inventory Provide a "Safety Margin" Although macro uncertainties are high, the fundamentals of copper still provide strong bottom support for the price. Supply side: The disturbance in Chile and the tight supply pattern continue. Chile copper mines: About 70% of the copper exports to the US come from Chile. If Chile obtains an exemption from US tariffs, the COMEX and LME copper price spreads may narrow significantly, but due to the US copper tariffs still in place, the COMEX copper price will still be higher than non-US markets, and the copper that has flowed into the US is less likely to flow out. Domestic tight supply: Domestic copper concentrate processing fee (TC) remains at a low level (about 80 US dollars/dry ton), and mining companies have a strong willingness to hold the price. Data on July 28th shows that the domestic spot copper inventory is 125,000 tons, an increase of 0.32 million tons compared to 24th, but the increase mainly comes from imported copper arrivals, with limited domestic supply arrivals, coupled with weak consumption, the increase in inventory is limited. Demand side: Weak seasonality and expectations of inventory replenishment form a "weak balance" in the traditional off-season: July-August is the traditional off-season for copper consumption. Orders from downstream industries such as cables and home appliances have weakened, and spot market trading has been cautious, with only urgent purchase activities being the main form. Inventory replenishment expectations: Some enterprises are concerned about the rise in copper prices and have begun to prepare in advance. Coupled with the fact that domestic inventories are at historical lows, the copper warehouse inventory of the Shanghai Futures Exchange is 18,083 tons, and the copper warehouse inventory in the bonded area is 3,313 tons. The sellers have strong confidence in maintaining the price, and the spot premium structure (the Yangtze River spot premium is 230-270 yuan/ton) provides support for the price.
III. Market sentiment and capital situation: The strengthening of the US dollar suppresses, but risk sentiment recovers. US Dollar Index: The short-term strong pressure on copper prices is due to the strong attack of the US Dollar Index (DXY) recently, which broke through the 50-day moving average at 98.30 and reached 99.14 (the high point since June 23rd) during the session. The main reason is the correction of the market's expectations for the Fed's interest rate cut. The strengthening of the US dollar directly pushed up the holding cost of copper priced in US dollars, suppressing the upward space of copper prices. Risk sentiment: The IMF raised China's growth expectations, boosting the market. The IMF also raised China's 2025 economic growth expectation from 4% to 4.8% on the same day, coupled with the domestic strengthening of growth policies (such as "trade-in"), the market risk sentiment marginally recovered, and some funds shifted from safe assets to commodities, providing indirect support for copper prices. IV. Future outlook: Settle in 72 hours, short-term relatively strong but with limited space. The key to the short-term (the next 72 hours) copper price trend lies in the two events on August 1st: • If the US copper tariff exemption for Chile is implemented on August 1st: COMEX copper prices may slightly fall due to the improvement in supply expectations, but the non-US market (such as LME, SHFE) has a difficult situation due to the tight ore situation, and the price resilience is strong;
• If the Fed releases the signal of "no interest rate cut this year": The US Dollar Index may break through 100, and copper prices may be under pressure in the short term, but with the support of low domestic inventories and tight ore supply, the correction space is limited (it is expected that the support level of the main contract of copper on the Shanghai Futures Exchange is 78,500 yuan/ton);
• If there are unexpected positive news from the China-US trade negotiations: Market risk sentiment will rise, and copper prices may break through the 80,000 yuan/ton threshold, but it is necessary to be vigilant of the risk of "buying expectations, selling facts" for the upward pullback. In the medium term, global copper mine supply growth slows down, according to ICSG, the annual growth rate is expected to be 3.2%, and the demand for copper in the new energy field (photovoltaic, electric vehicles) continues to grow, expected to contribute an increment of 15%, the copper price center is expected to rise, but it is necessary to pay attention to the matching℃of the Fed's interest rate cut rhythm and the global economic recovery. In summary, the current copper price is in a "macro suppression" and "fundamental support" game period, the key events in 72 hours will determine the short-term direction. Although the strengthening of the US dollar and weak demand constitute pressure, the core contradiction of tight ore supply and low inventory still provides a "safety cushion" for the price. Investors need to focus on the implementation of the tariff on August 1st and the Fed's decision, and treat the short-term with a range oscillation (78,500-80,500 yuan/ton) thinking, in the medium term, they can set up positions in ore companies and processing leading enterprises at a low price. Risk warnings: The Fed's interest rate cut is not as expected, the supply of copper from Chile exceeds expectations, and the global economic recovery slows down.
